BP Castrol K.K. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥10.67B
• Operating Income: ¥1.14B
• Net Income: ¥758M
• EPS: ¥33.05

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

BP Castrol K.K. (single-entity, JGAAP) delivered solid FY2025 Q3 year-to-date performance with revenue of ¥10.67bn, up 11.1% YoY, and operating income of ¥1.135bn, up 17.7% YoY, indicating positive operating leverage. Net income rose 10.4% YoY to ¥758m, translating to a net margin of 7.10%, supported by steady cost control and likely favorable pricing/mix in lubricants. Gross profit margin is reported at 34.1%, consistent with a value-added product mix and disciplined pricing amid input cost volatility. Operating margin stands at approximately 10.6%, and ordinary income exceeded operating income (¥1.211bn vs. ¥1.135bn), suggesting net financial/other non-operating gains. DuPont analysis shows ROE of 7.75% driven by a 7.10% net margin, 0.819x asset turnover, and modest financial leverage of 1.33x, reflecting an efficiency-led rather than leverage-driven return profile. The balance sheet is conservative: total assets ¥13.02bn, liabilities ¥3.43bn, and equity ¥9.78bn, implying low gearing (D/E ≈0.35x) and ample solvency. Liquidity is strong with a current ratio of 365% and quick ratio of 329.5%, backed by working capital of ¥8.62bn and relatively light inventories (¥1.15bn). Cash flow details are not disclosed in the XBRL set (OCF/FCF reported as zero placeholders), limiting earnings-to-cash validation; however, the company’s low leverage and strong liquidity mitigate near-term balance sheet risk. Dividend data are also undisclosed (DPS shows as zero placeholder), so payout policy and cash returns cannot be assessed from this dataset. There is an internal inconsistency between revenue, cost of sales, and gross profit figures; the reported gross margin (34.1%) aligns with gross profit of ¥3.633bn and revenue of ¥10.669bn, so analysis prioritizes those consistent data points. The equity ratio is shown as 0.0% in the dataset but is calculable at roughly 75% using the provided equity and assets, indicating a robust capital structure; we treat the 0.0% as a non-disclosure artifact. Overall, profitability trajectory is favorable, with improved operating income outpacing revenue growth, robust margins for the category, and healthy returns. Key uncertainties remain around cash flow generation, capex intensity, and dividend policy due to undisclosed items. External risks include base oil price volatility, FX (USD/JPY) swings, competitive price pressure, and auto lubricant demand trends. Near-term outlook appears resilient given pricing/mix discipline and operating leverage, but monitoring gross margin stability and inventory dynamics versus commodity inputs is critical. The company’s financial flexibility positions it well to navigate input cost cycles and demand fluctuations.

Profitability Analysis

ROE_decomposition: Reported ROE is 7.75%, derived from Net Profit Margin 7.10% × Asset Turnover 0.819 × Financial Leverage 1.33. This indicates return is driven mainly by margins and asset efficiency with limited leverage contribution. margin_quality: Gross margin is 34.1% (gross profit ¥3,632,969k on revenue ¥10,669,000k). Operating margin is ~10.6% (¥1,135,000k/¥10,669,000k). Ordinary margin is ~11.3% (¥1,211,000k/¥10,669,000k). Net margin is 7.10% (¥758,000k/¥10,669,000k). The improvement in operating income (+17.7% YoY) versus revenue (+11.1% YoY) suggests positive pricing/mix and cost discipline. Note: cost of sales vs. gross profit shows inconsistency; analysis relies on the internally consistent gross profit and margin provided. operating_leverage: Revenue +11.1% YoY vs. operating income +17.7% YoY implies operating leverage with incremental margins > base margins. This suggests SG&A grew slower than gross profit and/or pricing outweighed input inflation.

Growth Assessment

revenue_sustainability: Revenue growth of 11.1% YoY likely reflects a combination of price increases and stable-to-improving volumes in automotive and industrial lubricants. Sustainability depends on maintaining price discipline as base oil prices and FX normalize. profit_quality: Net income growth of 10.4% aligns with operating income expansion; ordinary income exceeding operating income indicates some support from non-operating items (e.g., interest income or FX), but core operating profit remains the main driver. outlook: Assuming stable demand and disciplined pricing, mid-to-high single-digit revenue growth with resilient double-digit operating margins is plausible. Key swing factors are base oil costs, USD/JPY, competitive pricing, and auto after-market trends.

Financial Health

liquidity: Current ratio 365% and quick ratio 329.5% indicate ample short-term liquidity. Working capital is ¥8,618,875k with inventories of ¥1,153,656k, suggesting modest inventory risk relative to current assets. solvency: Debt-to-equity is ~0.35x (total liabilities ¥3.431bn / equity ¥9.783bn), implying low leverage. Calculated equity ratio is ~75.1% (¥9.783bn/¥13.024bn), despite the dataset placeholder of 0.0%. capital_structure: Leverage is conservative (financial leverage 1.33x), providing capacity to absorb input cost volatility without stressing the balance sheet.

Cash Flow Quality

earnings_quality: OCF, capex, and FCF are undisclosed (zeros are placeholders). As such, earnings-to-cash conversion cannot be validated. Given low leverage and strong liquidity, near-term cash flow risk appears contained, but confirmation is needed when cash flow data are available. FCF_analysis: Free cash flow cannot be calculated due to undisclosed OCF and investing CF. With operating margin ~10.6% and modest inventory levels, underlying FCF potential appears reasonable for the business model, pending data. working_capital: Large working capital base (¥8.62bn) supports operations; monitoring receivables and inventory turns is important given commodity-linked input costs and price cycles.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are undisclosed (zeros are placeholders). EPS is ¥33.05, but without DPS we cannot assess payout. FCF_coverage: Not assessable due to undisclosed OCF/FCF. policy_outlook: With low leverage and strong liquidity, there is capacity for shareholder returns, but explicit policy cannot be inferred from the provided data.

Risk Assessment

Business Risks:

• Base oil price volatility affecting gross margin
• FX (USD/JPY) fluctuations influencing input costs and pricing
• Competitive pricing pressure in lubricants market
• Automotive demand cycles (aftermarket and OEM) impacting volumes
• Product mix shifts (e.g., EV adoption affecting lubricant requirements)
• Supplier concentration risk tied to global oil majors
• Inventory valuation risk amid commodity price swings

Financial Risks:

• Undisclosed cash flow metrics limit visibility on cash conversion
• Potential working capital swings (receivables/inventory) impacting OCF
• Exposure to non-operating items (ordinary income > operating income) introduces earnings volatility
• Tax rate variability (estimated ~31% based on disclosed tax and net profit)

Key Concerns:

• Data gaps on OCF/FCF and capex impede assessment of earnings quality
• Inconsistency between cost of sales and gross profit figures
• Unreported dividend information obscures capital allocation visibility

Investment Implications

Key Takeaways:

• Solid YoY growth with operating income outpacing revenue, indicating operating leverage
• Healthy profitability: gross margin 34.1%, operating margin ~10.6%, net margin 7.10%
• ROE 7.75% driven by margin and asset efficiency with modest leverage
• Very strong liquidity (current ratio 365%) and low leverage (D/E ~0.35x)
• Cash flow and dividend data not disclosed; confirmation needed for cash conversion and payout policy
• Monitor commodity and FX dynamics given sensitivity of margins to base oil and USD/JPY

Metrics to Watch:

• Gross margin trend vs. base oil costs and FX (USD/JPY)
• Operating margin and SG&A efficiency
• Revenue mix (price vs. volume) and channel performance
• Inventory days and receivables days (working capital intensity)
• Ordinary income components (interest/FX/other) vs. operating income
• Effective tax rate stability
• Disclosure of OCF, capex, and FCF; dividend announcements

Relative Positioning: Within Japan’s lubricant peers, BP Castrol K.K. exhibits robust margins and a conservative balance sheet. Its ROE is respectable given low leverage, implying quality-driven returns; however, limited cash flow disclosure constrains comparative assessment of cash generation and shareholder return capacity.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis